Worldwide commercial vehicle industry to play a big role in meeting targets set by governments

GLOBAL CO2 emissions reduction requires a contribution from the transportation sector, including the commercial vehicle industry, according to an International Energy Agency (IEA) global CO2 emissions forecast commissioned by Roland Berger Strategy Consultants.

In “Truck Powertrain 2020: Mastering the CO2 Challenge,” Juergen Reers, managing partner of Roland Berger Strategy Consultants, said that to keep global warming less than two degrees Celsius by 2100, major CO2 reductions are needed.

The commercial vehicle sector is a key to accomplishing this because growth of absolute emissions from the transportation industry is expected, especially due to development in non-OECD (Organization for Economic Co-operation and Development) countries.

Reers said governments are undertaking steps to address this challenge. Their initiatives include: setting up ambitious but feasible and transparent targets; defining methods for measuring CO2 emissions; and developing incentives to promote early adoption. By 2020, emissions targets are expected to be in place for most of the major truck markets.

The first-ever fuel efficiency targets in the US will require 7% to 20% reduction by 2018, compared to 2010, according to Reers. The desired results include greenhouse gas (GHG) emissions reductions of 250 million metric tons and $41 billion saved.

“If we do nothing, CO2 emissions will increase by 45% by 2130, and that would translate into five degrees Celsius global warming,” he said. “A lot of regulations are focused on light duty, which represents over 40% of total CO2 emissions from the transportation sector. Increasingly, the medium- and heavy-duty sectors are coming into the focus of the regulation, which represents 20% of GHG emissions.

“We have done market modeling. Class 4 and up need to be reduced until 2020 by 25% to 30% and 2030 by 40%. So that's a significant challenge. We expect this will also be a reference point governments will take into consideration when they start to regulate CO2 for the commercial vehicle sector.”

He said that incentives will play a big role in this process.

The US is among the global leaders, with federal tax incentives of up to $18,000 for “alternative fuel vehicles,” including hybrids. There are state and local incentives, including tax credits.

“In the vehicle sector, there has to be a customer benefit,” Reers said, “and total cost of ownership must give a payback within at least the vehicle life.

“In the US, if you compare government incentives on the supply side, there are a lot of activities going on, such as federal tax incentives, improving highways, and promotion.”

All market players need a comprehensive strategy to respond to the challenge and to the upcoming regulations, Reers said.

“There is no such thing as a silver bullet,” he said. “So we have to manage different solutions, which requires a strategy that's reflexive. For the foreseeable future, we expect significant differences between product markets. So we need to develop regional strategies.

“New players are coming onto the scene to meet the challenges. On the other hand, the supply chain is becoming more complex. New materials, new technologies, and price fluctuations need to be managed. It requires a much more integrated effort in product development and R&D.”

Reers said an overall CO2 emissions reduction of 25% to 30% for new vehicles can only be achieved by a mix of costly new technologies.

“If we look back 20 years or so, we achieved fuel efficiency improvement of the conventional powertrain of almost 30%,” he said. “It's a significant step up with hybrid-electric vehicles. We know this is very costly and therefore requires a very cautious consideration. This would be the biggest challenge in front of us.

“In city buses, we see a very big opportunity with hybrid electric. In long-haul trucks, the reduction of CO2 is rather limited, but if you combine this with a significantly higher number of miles driven, it could be done in the 2030 time frame, depending on fuel prices. In city trucks, a 2015 time frame is possible.”

BRIC markets (Brazil, Russia, China) will need to upgrade to the current triad level of sophisticated technologies, because they are up to five years behind those in the triad markets.

“Powertrain technology is less advanced, and tires and road conditions also contribute to higher fuel consumption,” he said.

OEMs, suppliers, and fleet customers will need to build partnerships to promote new technologies. Market players will need to define their supply-chain strategy for new systems to address potential challenges, Reers said. “It is one of the biggest game-changers we have in front of us, but I think the industry has proven it can deal with challenge. It can turn this into a big opportunity for growth.”

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